The perception that senior executives are immune from disciplinary proceedings is incorrect. Although the more senior one gets, the less formal the nature that disciplinary actions tend to take, an increasing number of senior executives find themselves being given ultimatums to depart, often at short notice, with levels of compensation that will not allow them to survive until they gain alternative employment.As "churn" among executives becomes more frequent, so too does it become increasingly important to have a properly structured employment contract, or 'Service Agreement', as they are also known. With the compensatory award following a successful unfair dismissal claim limited to £63,000 (from 1 February, 2008), the Employment Tribunal is often an inappropriate forum for a dismissed senior executive to bring legal proceedings to recover losses. It is his/her potential claim for "wrongful dismissal" - ie, salary and various benefits during notice period - in either the Employment Tribunal or High Court, where compensation is potentially unlimited, that often has greater benefit and should be considered when an executive accepts an appointment, not just when facing dismissal.As well as potential monetary losses, careful thought should be given to the effect that contractual restrictions may have on an emp-loyee's future ability to earn after departing from an employer. At the moment, there is a trend towards increased enforceability of post-termination restrictive covenant, making it even more difficult to move between employers. Also, the employee needs to appreciate the effect of seemingly innocuous terms, such as 'payment in lieu of notice' and 'garden leave', before a Service Agreement is signed.Once working under a Service Agreement, the pressures upon executives often start to mount and the ways they react are considerable and varied. Many boards wrongly assume that such people can always cope. Although it is more junior employees who tend to be signed off with stress, senior executives are at least as likely to require medical and other support. Although Service Agreements often contain provision for pay-ment in full during periods of absence, there is concern that such absence may damage an executive's career prospects. So expert guidance is essential in such situations. Strategic legal advice can be coupled with the provision of arange of coaching and counselling support services, which usually enable senior executive clients either to rebuff suggestions that they may wish to depart, or enable them to negotiate compensation that affords them an opportunity to begin a new career on terms they feel they have controlled. nl Rob Bryan is a partner at Oxford-based solicitors Darbys.
Living on the edge
07 March, 2008
Increasingly pressurised work environments are taking their toll on over-stressed executives and properly structured work contracts are important, says Rob Bryan
Are you a senior executive or director? Are you also one of an increasing number of people who, internally, feel under pressure to perform at levels that are not sustainable, but without which, your future is insecure? The pressure comes from fearing what might happen if you do not perform to the requested level.